Let’s understand India!

By Mineka Wickramasingha

There has been a lot of hype about CEPA and it is necessary to look at it again as the Government’s decision to go or not to go with CEPA is vital for the future of our country. The pertinent question is, why are we signing CEPA? Are there great benefits to the country, what are our commitments in return to receive these benefits and what are the threats and doubts?

We have heard threats from the captains of industry, eminent businessmen and the doubts expressed by the professionals.

Some threats, doubts and realities

nIndia is huge; Sri Lanka is tiny. Indian population is 1,200 m: Sri Lanka a mere 20 m. India has surfeit of dollar billionaires, Tatas, Birlas, Ambanis, etc., but we have none with such clout.

nIndian factories are colossal whereas our most formidable ones are small in comparison. The scale of operation in India is gigantic and the raw material is available and would have a competitive advantage over Sri Lankan products. Sri Lanka can only boast of a few FMCG industries that are somewhat large and may be the only ones that would survive CEPA, but in a niche market against the Indian giants.

nLarge-scale advertising for Indian manufacturers is totally free of charge in cable channels. 40 channels are telecasting Indian advertisements 24 hours a day and conveying their messages to over 300,000 households completely free of charge. Even less developed countries like Bangladesh have clamped down and foreign advertisements shall be aired only after payment in foreign exchange. Revenue to the Government is lost and Indian products have an unfair advantage over Sri Lankan products. In our country not only are we deprived of a level playing field but an adverse field for locals with uneven bounce that would hurt the local players. This is a huge advantage in marketing of Indian products

nIn addition, they have the clout to enter our market with low prices and sustain long price wars, smother competition by carrying out advertising campaigns, promotions, etc., without the slightest dip in their bottom line, which the industries of the small neighbour cannot afford. This will result in the closure of our SMEs one by one.

nPertinent facts are that Sri Lanka’s regulatory bodies are too weak whether it is monitoring foreign advertising in our channels or enforcing Immigration laws and Inland Revenue vigilance. In an environment where controls are already lax, the bureaucracy lackadaisical and when CEPA is in force, exploitation of our weak system would swell and spell disaster.

nDoubts expressed by the professionals inter alia are that Indian standards, which are vastly different to ours, would apply and below mediocre professionals would be employed. Lowering of standards both in quality, price and large-scale employment migration would result. A percentage from the huge unemployment figure of over 100 million would find easy access to Sri Lankan industries especially in those managed by Indians.

FTA

Ten years ago the ISLFTA (FTA) started with fanfare when the two PMs signed the agreement despite mild protests from certain quarters of Sri Lankans. The preamble of the FTA clearly spells out the necessity of reciprocity and a level playing field to maintain the spirit of the agreement.

Why has it failed? Is it Sri Lanka who violated the fundamentals? In fact it never was a free trade but an agreement with concessionary duties imposed by India. Sri Lanka had to follow by introducing high cess to offset the disparity.

When imports are injurious to any one-country duties could be clamped but the manner it was implemented violated the spirit of the agreement as emphasised clearly in the preamble. Arbitrary action to safeguard Indian industry has been taken without any reference to the other signatory.

Vanaspathi and copper were good examples that resulted in the closure of many industries. Hidden barriers and customs delays and several obstacles have discouraged exports to India. Pepper exports were another example. This is their clout. Practically everyone who has exported to India or established a presence has sad stories to narrate.

The world’s No. 4, the famous Italian confectionery giant Ferrero, did their ground studies and after consultations with Indian officials started a factory in Sri Lanka to export under the FTA. However, the manufacture had to be aborted when they were later classified as non-eligible for FTA concessions. The foreign investors left and shifted operations to Pune, India. Sri Lanka lost this lucrative export-oriented venture.

This is but one example amongst many Sri Lankan industries that have had severe consequences after signing of the FTA. Why haven’t our leading bureaucrats, involved in decision-making, protested instead of being supportive of India’s arbitrary actions? The question is, could we as equal partners claim our right to protest? In our case it is made clear to us, either retract apologies or support them. Clearly we do not have the clout, but why endorse?

Strangely, an economic pundit who supports CEPA at first boasted about the success of the Indian industries established in Sri Lanka under the FTA, citing copper and Vanaspathi. But after India’ arbitrary action of increasing the import duty of these items by 100%, which made them close their operations in the FTZs, exports plummeted, but did not affect Indian exports that kept escalating.

Then this same pundit called these industries fly-by-night operations that deserved closure. Could we rely on these shifty pundits to participate in or recommend policy decisions? Today some high-ups in the Government are of the same attitude. Are they victims of ‘Dollar Packages’?

A pragmatic standpoint on CEPA

Let’s look at CEPA not only from an academic point of view but lay emphasis on the ground realities that we are facing, which are likely to become serious threats if CEPA is signed. Let’s look at it from the standpoint that admits our limitations, and our inability to stem a potential threat.

Have we forgotten the past, the recent past when India trained and supplied arms to the LTTE overtly, disregarded our sovereignty and violated air space? And now the ‘fishermen issue’ interfering in our Judiciary? The satellite pictures of the flotilla threatening to enter our shores were frightening.

India is a world power – the big, very big brother – and once yielded we would not be in a position to retract. Gamini Weerakoon in his column made reference to Mark Twain, in ‘Tom Sawyer Abroad’: “I asked Tom if countries apologised when they had done wrong and he says ‘Yes, the little one does.’”

Therefore, a pragmatic view necessitates taking into consideration the past and prevailing attitude of India; even the masses of Tamil Nadu are sometimes belligerent towards its small neighbour. Such a standpoint is necessary as Sri Lanka and India are hugely imbalanced in size, wealth and attitudes.

Contd. on page 14

Let’s understand...

Is there an underlying motive behind CEPA?

The pros have been argued in general terms about futuristic possibilities, more sentimentally than pragmatically. Detail benefits have not been spelled out except to piggyback on the big brother and collect the crumbs. But the cons have been analysed with the contents of CEPA, what it embodies in great detail.

We know that the ground realities are not conducive to signing of CEPA. The strong possibilities that exist of Indian dominance of our home grown industry, manipulating the Stock Exchange and taking control of companies, the invasion of Indian professionals, the influx of labour and people without restraint have been discussed and examples prove to us of what is happening today and likely to happen in the future. This is before the signing of CEPA. Does Mark Twain echo in our ears?

Another question that baffles us is why is India at every opportunity, whether it is the Ambassador or foreign dignitaries, showing unprecedented interest to propagate the benefits that would accrue to Sri Lanka from CEPA?

CEPA, CECA or CEPA with a different interpretation

Comprehensive Economic Partnership Agreement (CEPA) denotes very clearly an intention of a binding agreement whereas the Comprehensive Economic Cooperation Agreement signed with Singapore (CECA) refers to a co-operation and by its classification it is not binding.

The ‘ayes’ for CEPA say the two agreements are the same. An agreement no doubt depends on its contents but the two acronyms are not the same. The issue is then, why the Singapore Agreement – a nation with a super administrative system – named it CECA, which is a different nomenclature from CEPA. The contents of the agreement and the pressure build-up by India point out to a Compulsory Economic Partnership Agreement and not comprehensive as is made to be known. Let’s think about this seriously.

Prerequisites to ponder before signing CEPA

Confidence in each other

Both parties, Sri Lanka and India, should have confidence without the slightest doubt of sinister motives or a hidden agenda cleverly disguised by rhetoric and semantics. Are there reasons to doubt India’s intention? Past incidents are fresh in our minds when India has used its clout to coerce us to signing agreements or change our stance. Even the stalwart JRJ had to give in but the shrewd leader got the better by agreeing to the IPKF. Parrippu drop is just one example.

Deterioration of living standards

Sri Lankans are friendly people enjoying life in a beautifully country with beautiful aesthetics living in reasonably good surroundings, with sanitation and cleanliness surpassing the poorer India. The danger is that Indian standards may apply with the Indian influx to industry and services.

We experienced this at Horana during the times of the Indian copper industry and in Galle FTZ when living standards deteriorated. Ten in a dingy room and poor sanitation habits caused disturbances in the neighbourhood.

India’s muscle

nIt is well known that India’s relationships with her neighbours are very much the bullying tactics of the elder brother. Nepal, Bangladesh and Bhutan have experienced harassment and coercion. We have successfully resisted and India too respected our views in the past. During our warring times India was given the status of the formidable elder brother by the Western powers that did not want to interfere in our region. Chandrika’s ascension to power and the leaders that followed have looked up to India for support and solutions. By default India strengthened that position. Today she is a world power and wants to dominate the smaller countries of the region. It is heart warming that the incumbent President has resisted and has not been subdued by Indian or Western pressure. Being supportive of the local industries he has clearly shown that our country comes first, before any other consideration. Thank you, Sir.

nIndia has repeatedly acclaimed that CEPA is for the benefit of Sri Lanka so much so the Indian Commercial Attaché at his farewell dinner repeated that this is the one time he is negotiating seated on the opposite side, meaning for Sri Lanka. So generous to pressurise Sri Lanka to sign. Was that a pre-dinner joke or was this his estimation that Sri Lankans are naïve? Does CEPA stand for Compulsory Economic Partnership Agreement? Can’t we have the option of refusal without the Sword of Damocles suspended over our head?

nPowerful countries use their clout to offer dollar packages to bureaucrats of other governments, in which they have interests, to make these officers obligated and count on their support in controversial subjects. These dollar package parasites act against the best interest of the country they are born and serve. ‘The Economic Hit Man’ by John Perkins gives a detailed account of the tactics adopted by powerful countries to dominate and subdue poorer nations.

nThe engine of growth is the business sector in both agriculture and industry. The businessmen protested recently against the signing of CEPA. India resented and demonstrated her might by delaying the issuance of business visas to Sri Lankans. It took a month for processing.

nLet us ponder – Is this a trade agreement well meant for the benefit of both countries in a win-win situation? But India does not need ISLFTA or CEPA to expand its trade. It is growing and Indian goods are competitive. India enjoys the No. 1 slot for exports to our country and that position would not be threatened in the future. Even so it is ‘sillara sales’ (petty cash) for India. They have already established industries and Indian business houses and their businesses thrive in Sri Lanka. They do not need CEPA to establish new industries.

nThe inclusion of trade in services agreement under CEPA, as horse sense prevail, would be most injurious to Sri Lanka’s tiny population of 20 million people against one billion two hundred thousand? Over 50% of our income is from services and is the intention to dilute Sri Lankan employment opportunities and open the floodgates to Indians? Would Sri Lankans derive any benefits from this agreement? India would gladly open the doors and say there we are, ‘Sri Lankans can apply for jobs in India’. Advertisements to any position in India would attract over thousands of applicants. Let alone of being a successful candidate, would any Sri Lankan be even called for an interview except for specialised positions with better skills? Some high-ups would argue with blinkers, ‘why blame CEPA if you don’t make use of their offer?’ Step down from lofty pedestals to terra firma and look at the reality without blinkers to study the problem.

nTrade agreements between countries cannot be a serious threat in today’s open economy if done in the spirit of mutual gain. But if it is dictatorial pressure aimed at economic strangulation to yield Sri Lanka to submission for political expediency, we certainly have to negate it and under no circumstances yield.

nIndia claims that by signing CEPA and with the enhancement of the FTA, the problems of the FTA would be solved. When credibility is questionable to honour an earlier agreement, does it justify the signing of CEPA? This is the most ludicrous claim put forward. The provision to enhance the negative list is available within the FTA, so why CEPA? To tempt us to sign CEPA with the promise that Tic Tack and the numerous industries in this category will be solved only strengthen the argument of coercion. Tempt us like giving candy to children.

nA condition of CEPA states that India shall open and manage 25 cinemas in the Northern Province and 40% of the films will be in Indian language. Sri Lanka is small compared to Indian states but the opening of High Commission offices in Jaffna, Kandy, Eastern Province and Hambantota are surely pointers of a sinister move. CEPA is a subterfuge cleverly disguised to hide the motive of economic strangulation and cultural pollution of Sri Lanka. This would naturally make Sri Lanka come under Indian dominance.

nWhy then are we signing CEPA? Is it due to political pressure – subtle but potent dictates from the very big brother? We have a President with courage. Please Sir, boldly decline the signing of CEPA. Let’s have CECA for all members of SAARC like ASEAN and a SAARC summit could be made the forum to focus a common CECA with all its members.

nWe are not naïve and foolish as the Indians believe. Over 60 years of independence is now threatened not by violence, but if we act imprudently or unwisely.